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'Tax us please,' say marijuana businesses

WASHINGTON -- As Congress wrestles with big budget cuts, one budding industry wants to help out the federal government with a novel message: Tax us, please.

Marijuana businesses and their backers say legalizing the drug and taxing it like alcohol would add billions to the federal treasury.

Some analysts dismiss a pot-tax bonanza as far-fetched, neither likely nor lucrative. But the idea is stirring newly serious debate on Capitol Hill.

The Senate finance committee, for instance, included marijuana taxes in an "options paper" listing fresh possible sources of revenue.

In the House of Representatives, legislation is pending on two tracks. The first would legalize marijuana, tax it and regulate it on a national scale. Even advocates don't expect that to pass anytime soon. A less ambitious bill called the Small Business Tax Equity Act would allow the Internal Revenue Service to provide immediate breaks on federal income taxes for marijuana businesses.

As Congress sorts through the proposals, members must confront a central irony: As pot is growing in popularity -- and is given a legal OK in some states -- that puts marijuana businesses in a stronger position to argue for tax breaks for selling a drug that's still outlawed nationally.

Some warn that if Congress doesn't treat pot sellers like other businesses, state plans to tax and regulate marijuana for recreational use in Washington state and Colorado are doomed to fail when they start next year.

"How can you run a business if you're not receiving the same tax breaks?" asked Rep. Adam Smith, D-Wash., one of 13 House members who are promoting the bill that would authorize the deductions for marijuana businesses.

Under the legalization bill, introduced by Democratic Reps. Earl Blumenauer of Oregon and Jared Polis of Colorado, marijuana would be taxed to help pay for substance-abuse treatment and law enforcement and to reduce the federal debt.

-- McClatchy Washington Bureau

Republished from the Winnipeg Free Press print edition August 21, 2013 A4

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